Page 6 - Print Version Volume 22 - Number 1126

South West Region Appoints Founding Head Read Less: Know More Central Bank Approves Dashen VP Appointments

The newly-formed South Western regional council has elected The central bank has given the nod of approval to Dashen Bank's recent
Negash Wagesho (PhD) as deputy head of the country's newest appointment of five executives as vice presidents.
regional state.
Dashen has been going through a managerial reshuffle in line with its strategic
Negash Wagesho has served as a state minister for Water‚ plan. The appointments also come following the recent departure of two senior
Irrigation & Energy. Recently, he was re-appointed as a state executives to lead industry entrants. Henok Kebede and Yared Mesfin left their
minister for Water & Energy by Prime Minister Abiy Ahmed (PhD). posts at Dashen to become the founding presidents of Amhara and Tsehay
banks, respectively.
The region's council held its first inaugural assembly last week and appointed
a house speaker and deputy speaker. During the assembly, the 52 member With the approval of regulators at the central bank, Yohannes Million, who
council passed decisions pertaining to the structuring of the region. previously served as Dashen's vice president of digital banking, has been
appointed chief digital banking officer. Similarly, Ayele Teshome, Eyerusalem
The South West Regional State came into being following a referendum held in Wagaw, Mesfin Bezu and Mulugeta Alebachew have also secured vice-
September this year. About 98pc of the 1.3 million voters registered cast their presidential posts at Dashen.
ballots in favour of the region's formation. The referendum was held Bench
Sheka, South Omo, Kafa, and Sheko zones as well as Dawro Special District in Following the general assembly held two weeks ago, the Bank's shareholders
the Southern Regional State have decided to raise Dashen's paid-up capital to 12 billion Br. The figure stood
at 5.4 billion Br at the end of the last fiscal year, meeting the central bank's
During its first extraordinary assembly held on October 30, 2021, the upper minimum threshold requirements.
house of parliament approved the formation of the country's 11th regional state.

NE W S The political developments
in Ethiopia are concerning
Page-6 Even with the Current . . . but youth unemployment still
needs to be addressed. It is Page 11
Fortune
at least partly a contributor
to the political situation in the
Vol. 21 No. 1126 country.

Nov. 28, 2021
Bunna Relishes Newfound
Life Insurance Success

Only 10 insurance companies offer long-term insurance policies

By TSION HAILEMICHAEL Despite years of single-digit growth, the the industry can do more with life culture and public consciousness change. has submitted a proposal to engage in the
premiums generated by the long-term insurance, coming out of a somewhat long-term insurance business, awaiting
FORTUNE STAFF WRITER insurance business increased by 13pc "disappointing" backdrop over the past “An increasing number of people are approval from regulators at the NBE.
to 579 million in 2019/20. The figure 20 years. Ebsa attributed the growth in becoming more conscious about their
The executives of Bunna Insurance S.C. jumped 67pc last year, almost reaching recent years mainly to a rise in group life future due to the COVID-19 pandemic," "We`ve submitted the required
are basking in the instant success of a life one billion Birr. insurance policy sales. It is conventional the broker told Fortune. documents two weeks ago," Kassa
policy as the firm recorded 8.5 million for most international organisations and Lisanework, CEO of Tsehay Insurance,
Br in gross premiums in the two months Private firms are leading the pack, with NGOs based in Ethiopia to buy group life Close to 56pc of the premiums earned told Fortune.
since it began offering the insurance Awash Insurance registering 325.5 insurance policies for their employees, by Awash in the long-term business
product. The figure is nearly three times million Br in life premiums last year, a according to Ebsa. came from COVID-19 travel insurance Bunna Insurance, operating with a
what the company's management had growth of 173pc. United Insurance saw policies, which covers the cost of medical paid-up capital of 173.5 million Br,
forecast for the entire fiscal year and premiums for life insurance grow to 71.3 Ebsa's observation is reflected in the expenses brought on by the pandemic has executives keen to capitalise on the
far outstrips previous industry records. million Br over the same period, jumping performance of Bunna Insurance, where while travelling. In their annual report firm`s newfound success. The company
by 56pc, and Nile Insurance recorded a group life insurance policies are a key released recently, executives of Nile has thus far been conducting life
Bunna Insurance, incorporated in 20pc increase to 57.9 million Br. element of the firm's success. Insurance have outlined the importance insurance business without agents, but
2013, was engaged solely in selling COVID-19 related products have on the it is working to change that, according
non-life insurance policies before an Industry insiders see room to grow the Others in the industry see different growing life insurance premiums. to Endalkachew.
application to involve in the long-term life insurance line of business further. reasons for the sudden rise in the demand
insurance business was approved by for life insurance products. An insurance This pushes others in the industry to "We're in the process of recruiting," he
the National Bank of Ethiopia (NBE) Ebsa Mohammed, an insurance expert broker working for Abat Insurance diversify their portfolios. disclosed. Bunna Insurance netted 34.6
in September this year. The firm began and manager at Alpha Consultancy, Brokers & Consultants observed a shift in million Br in profits last year.
offering ordinary, group, endowment praises Bunna's achievement. He believes Tsehay Insurance, incorporated in 2012,
and mortgage life insurance the
following month. A feasibility study was Roads Authority Lifts Embargo . . . (Cont'dfrom PAGE1)
conducted before launching the product.
Bunna Insurance's executives did not advance payment guarantee issued current fiscal year. guarantees, which are payable on and the Authority often end up in court.
expect more than three million Birr in The performance guarantee Tsehay demand. Regulators at the central bank
premiums in the first year, according to in favour of Akir Construction dropped. Insurance provided to Kif Construction, brought the unconditional bonds to A legal battle between ERA and United
Endalkachew Tesfaye, claims manager. “We've been renewing the guarantee which was hired to complete part of an end, seeing an alarming increase in Insurance was fought for seven years over
based on the contractor’s performance,” the road between Mazorai and Durki claims. a performance guarantee bond issued
"The study showed the business was said Kassa Lisanework, CEO of Tsehay but has failed to do so on schedule, is on Tibeb Construction's behalf. The case
nascent," Endalkachew told Fortune. Insurance, which netted profits of 32.8 an outstanding issue with the Authority. Banks can issue both conditional and went to the Supreme Court before United
"But there is an untapped market million Br last year. However, discussions are ongoing, unconditional guarantees. paid out 55 million Br to the Authority
opportunity." However, Akir Construction stopped according to Kassa. in January 2021, marking one of the
the work in January 2019 while the "There are issued we need to sort out," Financial institutions issuing these bonds largest settlements ever paid by a private
No private insurance company had project was 94pc complete. The Authority Kassa told Fortune. need to hold sufficient collateral to shelter insurance company in Ethiopia.
previously generated more than 2.3 demanded Tsehay to pay out the bond, an Disputes over guarantee bonds have themselves from risk, says Abebe Dinku
million Br from the long-term insurance issue of contention between the insurer become regular, leading the Authority (Prof.), construction materials and “The disputes arise mostly due to a lack of
business in the first year of operation. and the ERA ever since. Tsehay Insurance, to debar five insurance firms and seven management chair at the Addis Abeba awareness about the terms and conditions
Only 10 of the 18 insurance companies along with four other insurance commercial banks from issuing bonds Institute of Technology. of demand guarantees,” says Zufan.
offer long-term insurance policies. companies, was debarred by the Authority earlier this year. Bunna, Lion, Abay,
in March this year. Tsehay's managment Berhan and Tsehay were insurers on Most insurance firms do not require Nib Insurance has also been involved in
Ethio Life Insurance was the only had asked leaders of the Association of the receiving end. The banks included collateral from construction companies legal wranglings with the Authority.
firm exclusively engaged in the long- Ethiopian Insurers to negotiate with the the Cooperative Bank of Oromia and while issuing demand securities.
term insurance business since its ERA on its behalf, two months after the the state-owned Commercial Bank of Yehualashet Tamiru, an adjunct lecturer at
incorporation in 2008. However, a decision of the ban was made. Ethiopia (CBE), though these have since “We assess their track record and Addis Abeba University, agrees with Zufan.
lack of demand pushed the insurer to The ban was lifted after Tsehay paid ERA been reinstated. performance,” said the CEO of Tsehay
broaden its sphere by including non-life earlier this month, Ashchalew Asfaw, Insurance companies can only issue Insurance. “It might be difficult to grasp the terms,
insurance products in its portfolio four legal director at the Authority, disclosed conditional guarantee bonds, payable especially when it comes to conditional
years later. It was compelled to change its to Fortune. upon proof of breach of the contract However, the same does not hold for performance bonds," he said.
name to Ethio Life & General Insurance. The Akir Construction saga is not the terms. It was a practice instituted in everyone in the industry. Nib Insurance
only one involving Tsehay Insurance and 2004 after the insurance industry was requires collateral covering 50pc to Intended to bridge the awareness gap,
Non-life insurance has long dominated the Authority, the latter operating with a exposed to high risks with unconditional 100pc of the bond amount to issue a the Association of Ethiopian Insurers
the industry. However, there has been capital budget of 66.6 billion Br in the guarantee to contractors below grade offered a three-day training for officials of
a shift in recent years, with long-term four, according to Zufan Abebe, CEO of the Authority last week, given by experts
policies accounting for seven percent Nib Insurance. from the Africa Reinsurance Corporation,
of industry gross written premiums, based in Nigeria
up from five percent two years ago. Nonetheless, disputes between insurers